Understanding The Value Of Networks.

Networks. I adore them. I graduated as an Electrical Engineer in the department Network Theory at Eindhoven University of Technology. That explains it somewhat I guess.Below I look at networks in a conceptual way. There is no need to be an avid networker to understand this.

Let’s start. A network, any network, consists of nodes and links. It is often said that networks are valuable. Let’s agree. Where exactly is that value? It is in the links.

  1. Client is King. No way! The relation (link) with client (node) is King. If you let your client dictate your business, you better close your company now. We use account managers to manage the link, not to manage the client or node. This results in value creation for both nodes, your company and your client. If you are a very product oriented company, my product is so good everybody will buy it, you are focusing on your own node and forgetting about the value of the link which potential clients use to give you feedback about their real needs.
  2. In my telecom days we talked about nodes: phone switches, and links: transmission systems. The value for an operator sits in the links. Tele in telecom. The nodes don’t create value, despite that switches are expensive intelligent machines. They are cost centers. Those used to be manual
    operators. Going automatic, thanks to the undertaker Almond Strowger, has reduced the cost.
  3. Same with railways, you pay for traveling on a link, not for sitting, and waiting at a railway station. Most of us hate being waiting at a station.
  4. Internet platforms. Technically we have a data center and users on phones and PCs. Their value is often expressed in how many users they have. Hence we are counting links. Here is an issue, these links bringing value are physically owned by the telecom operators. Telecom operators complain about not making enough money of these links, their physical infrastructure. A too low ROA, Return On Assets. To me it means that the business models currently in use are not sustainable. Expect changes sooner or later. It also tells me that internet platforms are overvalued.
  5. Social networks. You are interested in connections, followers and likes. Those are links. LinkedIn offers you the opportunity to establish a connection with someone, that is a link and you hope you get something out of that, a client or a job. LinkedIn, the name refers to links, have you noticed?
  6. In your personal network these links give you access to knowledge and opportunities. Look at these links as ways to get what you need, things that are complementary to you.
  7. A link is managed by the two nodes it connects to. Like a Joint Venture. You are an investor in a link and expect value and the same is valid for the other side of the link.
  8. What about links that are not directly connected to you? You can reach them via your links. The best example is if you want to get something done, like getting a new job. You launch a request via the links you have and you have noticed already that hardly anyone has an answer. However they have their own links and one of these may have that job or solution you were looking for. I guess you have experienced that after a few days you get a message that says hey I have a friend that is interested, can, is willing, etc..
  9. Now let’s go into your brain. You have a lot of nodes, knowledge. You know how to fix bicycles, you can write poems, you know how to make Belgian waffles. Just three, there are way more. When you want to be creative and a good problem solver try to see the unknown links between all these nodes, (i.e. your knowledges). You will be surprised how that often leads to solutions. High intelligence goes hand in hand with connecting nodes by revealing hidden links. Good to know too that humorists do that very often. They show hidden links that are funny. If you look at the background of many known humorists you see that many have academic master degrees. Good example is Rowan Atkinson (Mr. Bean), he has an MSc in Electrical Engineering from Oxford University. Your links in your head also help you to memorize something by linking it to something else. Who said it? What was the topic? A funny example is when they ask you to tell a joke, you probably won’t know any joke immediately. Once you know one you suddenly remember many more. They are linked in your head.
  10. This leads to our education systems. We teach nodes, let students memorize nodes. I think it is better to focus on teaching how to link these nodes, thinking about what you have learned and how it links to other knowledge. I am very happy that Electrical Engineer studies do so, I have done exams with all the books on the exam table. Can I really bring my books? Yes it won’t help you if you don’t understand the topic. Further more I went to the The University of Chicago Booth School of Business because they teach you how to think, how to use these links. Many business schools, even the top schools, talk about nodes only. You get an MBA, the B stands for Blabla.
  11. What about one link and two nodes? A link between two persons or a link between two companies connects two nodes. Or a person connected to a company. Two nodes can be be Common, Complementary of Conflictive (3C) and that determines the link. Links with two common nodes are easy, links that connect complementary nodes are more work and give results and obviously avoid conflictive links.
  12. The number of all links is roughly the square of the number of nodes. It is described by Metcalf’s Law. A network also requires maintenance. Spend some time to review your links and remove those that do not add value (anymore). Or like in telecom, take them temporarily out of service.


Learn how to see. Realize that everything connects to everything else.

– Leonardo Da Vinci


Management Consultant in Innovation and Strategy Execution in Media, Broadcast, Telecom and IT. More than 25 of years of experience in ensuring that innovation strategies get executed. Producer and host of radio programs. Contact BBM PIN EF036F8E

Posted in Communications, Education, Globalization, Intelligence, Networking, Networks, Relations, Social Networks, Technology

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: